Benchmarks start new series on optimistic note; Nifty regains 8,000 mark

Indian Equity benchmarks started the new F&O series on positive note on Friday, with Nifty recapturing its crucial 8,000 level, while Sensex ended just shy of 26,400 mark. Markets traded with traction during the trade, though huge round of volatility witnessed in last leg of trade where frontline gauges trimmed most of their gains but still managed to end the session with a gain of over half a percent. Sentiments remained up-beat as investors were hopeful for a rate cut by the Reserve Bank of India (RBI) at its policy meeting on September 29. Some support also came with Finance Minister Arun Jaitley’s statement that India, with 8-9 percent growth rate, can replace China as the driver of world economy.

Some encouragement came with the government’s announcement of the ambitious Smart City project, which is hoped to attract investment to boost the economy. Government has announced Rs 48,000 crore for development of 100 Smart cities out of which 98 names were declared and rest two will be nominated in due course. However, markets trimmed gains in last leg of trade as investors turned cautious with Reserve Bank of India Governor Raghuram Rajan’s statement that the central bank will continue its focus on taming inflation, speeding up resolution of distressed projects and ensuring enough capital for banks through balance sheet clean-up. Depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 66.15 per dollar at the time of equity markets closing compared with its previous close of 66.04 per dollar.

On the global front, European counters, after a positive opening, entered into red despite Switzerland unexpectedly avoided a recession last quarter as investment and private consumption helped return the economy to growth. However, Asian markets ended mostly in green with the China’s yuan advancing the most since April after the central bank boosted the currency’s reference rate in the biggest increase in five month and injected more liquidity.

Back home, oil stocks flared up after oil prices rebounded by more than 10% on Thursday to post their biggest one-day rally in over six years following a report that Venezuela asked the Organization of the Petroleum Exporting Countries to hold an emergency meeting. Buying in metal pack too aided sentiments on the back of rebound in commodity prices. Logistics companies rallied higher for the third straight day on hopes that the government is considering reconvening Parliament to make another attempt to pass the Goods and Services Tax (GST).

The NSE’s 50-share broadly followed index Nifty rose by over fifty points and ended above the psychological 8,000 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over one hundred and sixty points to finish near the psychological 26,400 mark. Broader markets too were traded with traction throughout the trade and ended the session in green terrain. The market breadth remained in favor of decliners, as there were 1,294 shares on the gaining side against 1,405 shares on the losing side while 106 shares remain unchanged.

Finally, the BSE Sensex surged by 161.19 points or 0.61% to 26392.38, while the CNX Nifty gained 53.00 points or 0.67% to 8001.95.

The BSE Sensex touched a high and a low 26687.33 and 26270.17, respectively. The BSE Mid cap index was up by 0.20%, while Small cap index was up by 0.07%.

The top gaining sectoral indices on the BSE were TECK up by 1.76%, IT up by 1.52%, Infrastructure up by 1.38%, Auto up by 1.01% and Oil & Gas up by 0.91%, while Realty down by 0.49%, Consumer Durables down by 0.38%, Healthcare down by 0.30% and Bankex down by 0.23% were the losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 5.70%, ONGC up by 5.55%, Bharti Airtel up by 4.29%, Bajaj Auto up by 3.65% and GAIL India up by 3.17%. On the flip side, Sun Pharma down by 2.00%, Lupin down by 1.89%, Coal India down by 1.00%, TCS down by 0.27% and Larsen & Toubro down by 0.24% were the top losers.

Meanwhile, putting back his concentration on the inflation, the Reserve Bank of India (RBI) Governor Raghuram Rajan has said that the central bank will continue its focus on taming inflation, speeding up resolution of distressed projects and ensuring enough capital for banks through balance sheet clean-up.

While listing out short-term macroeconomic priorities, the RBI governor stated that focus on bringing down inflation in line with the proposed glide path, work with the government and banks on speeding up the resolution of distressed projects and cleaning up bank balance sheets and ensure banks have capital to make provisions, support new lending, and thus pass on future possible rate cuts.

Rajan in the Governor's overview to the annual report noted that despite efforts from both the government and RBI to restore macroeconomic stability, three areas are still 'work in progress' from RBI's perspective. The first being, economic growth is still below levels the country is capable of. Second, inflation projections for January 2016 are still at the upper limits of RBI's inflation objective, and 'Third, the willingness of banks to cut base rates -- whereby they forgo income on existing borrowers to attract more new business -- is muted. Not only does weak corporate investment reduce the volume of new profitable loans, some bank capital positions weakened by NPAs may prevent them from lending freely.'

The CNX Nifty touched a high and low 8091.80 and 7961.65 respectively.

The top gainers on Nifty were Vedanta up by 5.65%, ONGC up by 5.58%, Zee Entertainment up by 4.57%, Cairn India up by 4.38% and NMDC up by 4.29%. On the flip side, Lupin down by 2.30%, PNB down by 1.88%, Ambuja Cement down by 1.81%, Coal India down by 1.55% and Sun Pharma down by 1.72% were the top losers.

European Markets were mostly trading in the red; France’s CAC was down by 0.24%, Germany’s DAX was down by 0.55% while UK's FTSE was up by 0.08%.

The Asian markets, barring Hang Seng, closed in green on Friday in the final trading day of the week as investors cheered a second day of gains in Chinese and US markets. China’s yuan rose sharply against the dollar with traders citing large transactions by state-owned banks on behalf of the central bank to support the currency. China will increasingly adjust its economic policies in a targeted and timely way. The National Development and Reform Commission stated that it will pay more attention to the challenges faced by the Chinese economy and will work hard to help the country meet its major economic targets for 2015. Japan’s retail sales rose to a seasonally adjusted annual rate of 1.6%, from 0.9% in the preceding month while Japanese Household Spending rose to a seasonally adjusted -0.2%, from -2.0% in the preceding month. The percentage of the total work force that is unemployed and actively seeking employment during the previous month fell to a seasonally adjusted 3.3%, from 3.4% in the preceding month. Japan’s National Core CPI fell to a seasonally adjusted 0.0%, from 0.1% in the preceding month. Tokyo’s Core CPI, which excludes fresh food costs remained unchanged at an annualized rate of -0.1%.